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How does permanent life insurance work?
Permanent life insurance is designed to protect you throughout your lifetime. It comes in two basic forms: whole life insurance and universal life insurance.
Like all life policies, your beneficiaries will receive the death benefit of the policy at the time of your death. This can be paid out in a lump sum or in any one of a number of settlement options.
What makes permanent life policies unique is their ability to provide additional worth through cash value. You are able to access the money through loans or withdrawals – for example to finance a child's education or place a down payment on a new home. One thing to note: any loans or withdrawals will reduce the amount payable at death.
If you decide to cancel the policy at some point, policies can be surrendered for their current value.
Who should consider permanent life insurance?
Permanent life insurance might be right for you if you need
- Long-term coverage. As the name implies, permanent life insurance is issued for your lifetime. Still, the policy provides a benefit if you reach the maturity age defined in the contract (typically age 100 or greater) and the policy still has a cash value.
- Coverage later in life. Since premium payments remain the same throughout the life of the policy, permanent life insurance tends to be more economical, especially if you want to keep coverage active past retirement.
- To save money for a future goal. Depending on the policy, you may be able to use your cash value and dividends1 for loans, education expenses, or as a supplement to retirement plan income.
What types of permanent life insurance are available?
Secure Whole Life Insurance
- The most affordable whole life policy
- Doesn't provide dividends
Whole Life Insurance
- Provides the most cash value over the term
- Earn annual dividends1
20-Pay Whole Life Insurance
- Policy is paid up in 20 years
- Advantageous for kids or grandkids or those wishing to finish paying prior to retirement
- Earn annual dividends1
Universal Life Insurance
- Increase or decrease your premiums as circumstances change2
- Keep your death benefit level or have it increase as cash value grows
Additional considerations
While permanent life insurance has many advantages, level term premiums can be more economical when comparing equal death benefits. If permanent life insurance doesn't meet your requirements, consider term life insurance.
1 Dividends are not guaranteed.
2 Within IRS guidelines.
The product information contained on this website is informational only and not a statement of contract. All coverage options are subject to the provisions of the policy purchased and details of the policyholder's situation.
Shelter Life Insurance Company, 1817 West Broadway, Columbia, MO 65218